No evidence for Walker's claim that government regualtions impede job creation

The Walker administration's job creation strategy is based on two erroneous ideas. The first is that tax rates drive investment and business location decisions. There are no credible studies that support this position. Surveys of business executives indicate that tax rates are far less  important than demand for a firms' product or services, access to markets, including skilled labor, and the proximity to supplier chains. Tax breaks are not effective because they have little impact on the fundamental determinants of a firm's  demand and costs. I have written about this elsewhere so won't belabor the point. President George W. Bush's first Secretary of Commerce and former Alcoa CEO, Paul O'Neil, summed it up nicely when he told Congress:"As a businessman, I never made an investment decision based on the Tax Code. .. (I)f you are giving money away I will take it. If you want to give me  inducements for something I am going to do anyway, I will take it. But good business people do not do things because of inducements, they do it because they can see that they are going to be able to earn the cost of capital out of their own intelligence and organization of resources." Walker's second article of faith is that onerous government regulations impede economic growth. The Bureau of Labor Statistics (BLS) has examined this claim and its findings reject it. The BLS studied layoffs, job losses, and UI claims that employers report  are due to government regulations or interventions. They are miniscule— in only one case in the table below did they ever account for more than half of one percent. And in the most recent quarter, they were all about zero (technically, the number reported was too small to meet BLS sampling criteria). Source: BLS, Table 2 The problems facing Wisconsin and the nation are not due to high business or personal tax rates (effective rates in the U.S. are lower than those in virtually all advanced countries and Wisconsin's business taxes rank in the bottom half of all states) or "job killing regulations." The problem we face is inadequate demand, a byproduct of the nation's growing inequality.

Politifact: Walker's job claim is false!

The Milwaukee Journal Sentinel's Politifact has analyzed Walker's fictitious job creation boast that Wisconsin created half the nation's new jobs in June and labeled it false.

The MJS analysis is linked here.

Walker denies jobs boast even as allies repeat it

Less than a week after Governor Scott Walker claimed that Wisconsin had created half the nation's new jobs, he has denied making the statement.

The Wausau Daily Herald reports: "Walker said it was never his intention to draw a direct line between the Wisconsin total and the national total."

"We made it very clear at our announcement that (our number) was not half of all the jobs out there, though it is an interesting parallel," he said.

That's not what the Milwaukee Journal Sentinel's economics reporter John Schmid reported. Schmid wrote of the Walker's announcement:


"Walker noted that job growth in Wisconsin effectively accounted for about half of the new jobs in the nation in June, an abysmal month for job creation.

The state had a net total of 9,500 new jobs in the month, because a decline in government employment offset some of the gains in the private sector. Nationally, Walker said, 18,000 new jobs were created last month - 57,000 gained in the private sector minus a drop of 39,000 in government payrolls.

"It's incredibly important to put that in perspective," Walker said. "To have 9,500 net new jobs in the state at a time when the country saw just 18,000 net new jobs all across the country is incredibly good news..."

While Walker may be denying his earlier statement, others are not. As Bill Cristofferson reported in his blog, conservative James Wigderson mounted a spirited, if convoluted, defense of Walker while attacking Christofferson and me for questioning Walker's numbers.

More importantly, Walker's claim has become the newest Republican talking point.

At a town hall meeting in Whitefish Bay, Congressman James Sensenbrenner bragged that Wisconsin had created half the nation's new jobs in June and attributed this to Walker's economic policies.

U.S. Senator Ron Johnson repeated Sensenbrenner's and Walker's boast on national TV as did Assembly Majority Leader Rep. Scott Suder, R-Abbotsford, who bragged: "Accounting for more than half of the nationwide gain in June employment is a remarkable feat."

The same echo will will undoubtedly be heard in Madison over the next few weeks.

As I wrote earlier Walker used a misleading statistic to create a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program. 

Others have now picked up Walker's ball and are running with it. Rather than deny the truth about what he said, Walker ought to man up, admit he was wrong and actually do something to help the tens of thousands of Wisconsinites who are unemployed.

Gov. Walker's victory dance misses the beat

Last week Governor Walker claimed that Wisconsin was responsible for half the nation’s monthly job growth.

Republican Party politicians and operatives have run with Walker’s numbers, arguing they prove that his program of corporate and investor tax cuts and reduced regulation is working.

Let’s put Walker’s jobs victory dance iin perspective.

Several states; Texas (+32,000), California (+28,800), Michigan (+18,000), Minnesota (+13,200) and Massachusetts (10,400) had more job growth than Wisconsin. 

Using the Bureau of Labor Statistics data Walker touted, Texas was responsible for almost 200% of net job growth in June, California 150%, Michigan 100%, Minnesota 65% and Massachusetts slightly more than 50% .Nor was Wisconsin’s monthly percentage increase among the nation’s largest. Alaska experienced the largest over-the-month percentage increase in employment (+1.7 percent), followed by North Dakota (+1.2 percent), Vermont (+0.9 percent), and South Dakota (+0.8 percent).

In fact, Wisconsin was one of only 9 states that reported statistically significant over-the-month unemployment rate increases in June.

South Carolina experienced the largest increase (+0.5 percentage point), followed by Alabama, Arkansas, and Illinois (+0.3 point each) and Maryland, Montana, North Carolina, Texas, and Wisconsin (+0.2 point each). The unemployment rate did not increase in 41 states.

 Wisconsin lost nearly 171,000 jobs during the Great recession. It has gained back 50,000 over the last year and a half, about 30%.

These numbers illustrate what a useless, misleading and politically motivated statistic Governor Walker and DWD used in claiming half the nation’s job growth.

It is useless, misleading and politically motivated because it creates a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program.

More importantly, there is ZERO evidence that Wisconsin’s June job growth has anything to do with anything that Governor Walker or the current legislature has done. Economists recognize that there are lags between the adoption of economic policy, its implementation and the policy’s impact. Given the reality of policy lags, there has simply not been enough time for Walker’s initiatives to have had the impact that the Walker administration claims.

The creation of 9,500 jobs is a positive development. But it hardly justifies the Governor’s jobs victory dance.

What happened to Governor Walker's jobs agenda?

by Phil Neuenfeld  (

As Gov. Scott Walker on Tuesday delivers his first "state of the state" address, working men and women across Wisconsin are wondering what happened to the jobs agenda that played such a prominent role in November's election.

As a candidate, Walker pledged that addressing unemployment - currently 7.5% statewide but higher in urban and some rural areas - would be his administration's top priority and the focus of a special session of the Legislature. It was part of his promise to create 250,000 jobs by 2014.

So far, it's hard to pinpoint any action by the governor that creates a single job or does anything to boost the state from its economic slump.

There certainly isn't a new job to be found in Senate Bill 1 and Assembly Bill 1, the so-called tort reform legislation passed during the session. The measure severely limits the legal protections of workers and consumers injured through acts of corporate negligence or malfeasance, such as the "Big Blue" crane accident that led to the deaths of three ironworkers during the construction of Miller Park.

A witness testifying on behalf of the legislation flatly refused to say if it would create any jobs, calling it a "trick question."

Other initiatives by Walker and his allies are, to be blunt, head-scratchers. Without corresponding revenue increases, tax breaks for a handful of small businesses, deductions on health savings accounts and a voter ID bill actually will add to the state's $3 billion budget deficit. As a result, these moves threaten essential state programs such as health care for the elderly and education.

And while reasonable observers can disagree about the precise number of jobs lost during the high-speed rail fiasco, no one disputes the fact that the employment and economic opportunities in the construction, retail and manufacturing sectors the train would have brought are now gone.

In his address Tuesday, Walker probably will try to pin the blame for Wisconsin's budget woes on the wages and benefits of state workers. It's an argument that's unfortunate and misguided. State workers and their families, like their counterparts in the private sector, have made enormous sacrifices: Furlough days, double-digit jumps in payments for health care premiums and wage freezes have stretched and broken the budgets of public servants in every corner of the state. Demonizing public employees and their families is wrong.

The fact is that the state's finances will not improve until Wisconsinites are working again. The governor was elected on his promises to create family-supporting jobs, improve economic opportunities and build businesses.

Working families all over Wisconsin are cheering on the governor to make good on his promise to spur job growth. But we know that taunting elected officials from Illinois and putting up new signs at our borders are not serious job creation efforts.

Walker has formidable resources to accomplish his agenda. His allies control both houses of the Legislature, and he has one of the most powerful veto pens in the country.

So, will he use his power to do what he promised and focus on creating family-supporting jobs for Wisconsin? And, no, that's not a trick question.

Phil Neuenfeldt is president of the Wisconsin State AFL-CIO. E-mail pneuenfeldt@wisaflcio.org

This article is linked here. .

Talgo asks business leaders for help-don't hold your breath

Talgo Inc., the Spanish train manufacturer that recently established operations in Milwaukee, has sent a letter to Milwaukee's corporate spokesmen seeking their assistance in persuading Governor-elect Walker to reverse his decision to return an $810 million federal high speed rail grant. The investment is projected to create 13,700 jobs in Wisconsin.

Talgo selected Milwaukee's former Tower Automotive site to house its U.S. manufacturing facility because Wisconsin was the first state to order trains from the firm.

The letter asks Tim Sheehy, the Executive Director of the Metropolitan Milwaukee Association of Commerce (MMAC) and Jim Paetsch, who directs corporate relocation for the Milwaukee 7, to speak to the Governor elect on behalf of Talgo and other suppliers related to the project.

Don't hold your breath waiting for Mr. Sheehy to help.

Not only did Sheehy's organization contribute $381,500 to Walker's gubernatorial campaign , but Sheehy has already said he will not use any chips protecting Talgo's investment in Wisconsin. "Why beat a dead train," Sheehy told the MJS. His focus is on ensuring that Walker cuts taxes.

The MMAC and its Executive Director were more than willing to take credit for Talgo when Governor Doyle announced the company was coming to Milwaukee. ""We're Not Just in the Game - We're Winning!" read an announcement from the MMAC. Sheehy bragged that the M-7 was attracting new industries despite some of the gloomiest economic conditions in decades and claimed that Talgo's decision to locate in Milwaukee would help attract additional manufacturing firms to the city. Sheehy, standing to Governor Doyle's far left in the photo above, teased that a third deal with an unnamed firm was in the works.

But as recent events demonstrate the the only thing that really matters to Mr. Sheehy and the MMAC is cutting corporate taxes, despite the fact that corporate profits are the highest they have every been and Wisconsin's business taxes are among the nation's lowest.

The MMAC's narrow focus on lowering corporate tax rates trumps every other concern including creating 13,700 jobs, securing investment in manufacturing, and revitalizing Milwaukee's central city.

Don't hold your breath waiting for Mr. Sheehy to use any chips for Talgo or Milwaukee's unemployed. As long as Walker delivers corporate cut taxes, Sheehy will remain silent.

Local 212 rallies with hundreds for high speed rail jobs

Local 212 leadership rallied with hundreds of people outside the Talgo Inc. train manufacturing plant on Milwaukee's north side Monday hoping to persuade Gov.-elect Scott Walker to change his mind and endorse the construction of a high-speed rail line through Wisconsin as a way to create jobs and keep the state competitive.

Surrounded by supporters chanting "Trains mean jobs!" and "Jobs, jobs, jobs!" leaders from a broad range of organizations, including State Representative and Local 212 member Barbara Toles, stressed the project's importance as a catalyst for redevelopment at the city's former Tower Automotive site and the creation of new jobs, especially in Milwaukee's central city.

"Talgo represents a resurrection for many people in this state, and especially in this city," the Rev. Ken Wheeler, pastor of Cross Lutheran Church and Milwaukee Inner-City Congregations Allied for Hope told the crowd.

The Spanish firm Talgo moved to the Tower site as part of a plan to build a regional high-speed rail network that connects Milwaukee and Madison to Chicago and Minneapolis, funded with $810 million in federal stimulus dollars.

Weak job growth in May. Threat of double dip recession grows

431,000 net new jobs were created in May. But almost all of them, a whopping 411,000, were temporary U.S. Census jobs.

Private employers added only 41,000 new jobs in May, the lowest total since the start of the year.

Overall, the unemployment rate dropped to 9.7 percent, down from 9.9 in April., according to a report released this morning by the U.S. Department of Labor.

AFL-CIO President Richard Trumka said the low number of private-sector jobs is further evidence the recovery is still fragile.

"The Economic Recovery Act saved us from a second Great Depression, but it was not sufficient to power strong and sustained job growth, and its effects are expected to wane in coming months."

He called on Congress to do more to create jobs and sustain the recovery.

Most immediately, Congress must move quickly to extend unemployment benefits, restore health care benefits for the unemployed and provide aid to states to maintain jobs and vital services.

State and local governments shedded, 22,000 jobs in May. Without further action to offset state budget shortfalls, these job losses will undermine temporary gains from federal spending.

The underemployment figure, which includes those who are too discouraged to look for work or are working part-time out of economic necessity, dropped to 16.6 percent in May, from 17.1 percent in April-some 27 million U.S. workers without jobs or full-time work.

Wile temporary federal government jobs are rising because of the Census, permanent local government jobs are going away. State budget cuts could lead to as many as 900,000 jobs lost in 2010. And Congress decided last week to do nothing about that, cutting money in a jobs bill for the states to balance their Medicaid budgets.

Economists say monthly job creation must be 350,000 or more just to begin to make a dent in the unemployment rate.

The number of long-term unemployed workers continues to grow. In May, some 6.8 million U.S. workers were out of a job for 27 weeks or longer, up from 4 million a year ago. In May, 46 percent of unemployed workers had been without a job for 27 weeks or more.

The long-term jobless figures clearly show how important it is that Congress extend unemployment insurance (UI). Late last week, the House voted to extend unemployment benefits to millions of long-term unemployed workers who have been jobless longer than 26 weeks. But the Senate failed to vote on the measure before going on recess, meaning up to 1.2 million workers will have lost their unemployment insurance by the time the Senate returns from vacation.

Speaking earlier this week at Carnegie-Mellon University in Pittsburgh, Pa., President Obama said it is critical lawmakers extend unemployment insurance for several more months so that Americans who’ve been laid off through no fault of their own get the support they need to provide for their families and can maintain their health insurance until they’re rehired.

Extending unemployment benefits will not only support individual workers who have been unable to find jobs, but it will also stimulate the economy and help create more jobs. The money sent out in the form of unemployment insurance is quickly returned to the community, effectively supporting local economies. The median unemployed person has almost no cushion-only about $250 in liquid savings-at the time of job loss, resulting in a sharp drop in spending on essentials including food. Jesse Rothstein, chief economist for the U.S. Department of Labor summed up the nation’s jobless situation:

If you give money to someone who is unemployed, they are going to spend it the next day.

In his statement, Trumka adds:

America’s workers have paid far more than their fare share for the economic crisis - they’ve paid with their jobs, with their homes and with billions of dollars to Wall Street.

Today’s challenge is jobs. Unless Congress addresses this challenge with the focus and energy they brought to rescuing our banks, not only will a generation of workers be doomed to unemployment and the recovery itself put at risk, but dealing with our long-term fiscal problem will be all the more difficult.

Put America back to work- focus on jobs, not deficits

Op-Ed Columnist
The Magic Potion
By BOB HERBERT

With the marathon effort to overhaul the health care system behind us, it is time for the Obama administration to move quickly and powerfully to the monumental task of putting Americans back to work.

The just-say-no crowd will insist that we can’t afford a real effort to revitalize employment, that budget deficits are too high, that the economy will recover without additional government stimulus, that the president has used up most of his political capital, and that there isn’t much that government can do under any circumstances to create jobs.

Meanwhile, the United States is in real danger of sinking into a long-term economic funk. The recession is not over for the nearly 15 million people who are unemployed. Many of them have been out of work for longer than six months, a seeming eternity. Widespread joblessness and underemployment are threatening to become permanent features of the American landscape, corroding not just our standards of living but the very vibrancy of the American way of life.

Poverty and homelessness are increasing. More and more adult children, unable to find work, are living with their parents. The Times’s Michael Luo wrote in Monday’s paper about the increasing phenomenon of workers accepting jobs for which, in terms of their education and experience, they are considered overqualified.

Those who think some kind of robust recovery is hiding around the corner, just waiting to spring a pleasant surprise on us, are deluded. Too many families and individuals are tapped out. They’re struggling from week to week and month to month just to meet the necessities of housing, food and energy costs. Those crazed, debt-driven buying sprees that held the economy aloft for so long are over.

Foreclosure notices went out to 2.8 million households last year and that figure is expected to top 3 million this year. Nearly 1 in every 4 homes with mortgages is “underwater,” which means that the mortgage holder owes more on the property than it is worth.

You can’t get back to a robust economy without putting Americans back to work. The economy needs to be rebuilt on a solid foundation of good jobs at good pay, and many of those jobs will have to come from thriving new industries. This is a long-term project that demands big-time government involvement. It will require the kind of commitment — over an even longer period of time — that President Obama and the Democrats in Congress gave to their health care initiative.

Franklin Roosevelt had it right in his first Inaugural Address when he declared, “Our greatest primary task is to put people to work.” He underscored the urgency of the task when he said it should be treated “as we would treat the emergency of a war.”

The administration and Congressional leaders have been touting some recent legislation as “jobs bills,” but they are small-bore initiatives that will accomplish little. What is needed are bold new initiatives on several fronts. The federal government needs to do much more to help state and local governments that are in desperate fiscal straits because of falling tax revenues and are responding by laying off workers and cutting essential services.

A long-term program to rebuild the nation’s infrastructure (which was only made worse by the harsh winter) would create jobs and establish a sound industrial platform for 21st-century industries.

The transformation to a greener economy needs to be accelerated, and most of the manufacturing associated with that newer, greener economy should take place in the United States. And some new variation of the Works Progress Administration and the Civilian Conservation Corps should be developed to put economically distressed young people to work. What is happening to young, out-of-work and poorly educated American kids — not just in the big cities, but increasingly in suburban and rural areas, as well — is tragic.

The United States is a rich nation. To say that we cannot afford to do the things necessary to shore up the quality of our lives and establish a brighter future for coming generations is absurd. We always seem to have money for warfare and to bolster the interests of the monied classes.

As for the budget deficits, they will never be brought under control if Americans are not put back to work. Unemployment drives deficits by depriving the government of tax revenues and dramatically increasing the costs of safety-net programs and other public services. Putting Americans to work will ultimately make it much easier to begin bringing the deficits down.

The closest thing to a magic potion for individuals, families and the American economy is a job. F.D.R. understood that. The longer it takes for the rest of us to catch on, the deeper the long-term damage to the society will be.

US faces economic emergency

Politicians, economists and pundits blithely agree that the economy is recovering. After all the Gross Domestic Product (GDP) which measures the nation's output is growing and Wall Street's "too big to fail" investment banks are handing out bonuses larger than the lifetime earnings of American workers.

But if the economy is recovering, the American people are not. As the New York Times Bob Herbert writes:

There is an economic emergency in the country with millions upon millions of Americans riddled with fear and anxiety as they struggle with long-term joblessness, home foreclosures, personal bankruptcies and dwindling opportunities for themselves and their children.

The door is being slammed on the American dream and the politicians, including the president and his Democratic allies on Capitol Hill, seem not just helpless to deal with the crisis, but completely out of touch with the hardships that have fallen on so many.

The column is linked.

Massachusetts voters demand action!

Richard Trumka, President of the AFL-CIO, the nation's largest labor organization, says that the election of Republican Scott Brown in Massachusetts should not be interpreted as the electorate moving to the right, but as a message that people are angry about the economy and want change!

When Massachusetts voters cast their ballots for Scott Brown on Tuesday, they were sending a message to Washington lawmakers that they have not gone far enough to create jobs, reform health care and fix our nation’s economy, says AFL-CIO President Richard Trumka. In a video message, Trumka says voters showed they don’t believe Democrats have overreached—they think that the Democrats underreached.

You see, they believe that Wall Street’s being taken care of. They believe that corporate America is being taken care of. They believe the insurers are being taken care of. But they don’t think that workers are being taken care of.



The corporate media is spinning the election results to make it appear that voters don’t want health care reform or funding for job creation. But as Trumka states: “Voters haven’t changed their mind. Their two top priorities are jobs and health care.”

Yesteday’s election gave us that opportunity. It said to everybody: “We don’t want excuses. We want action. We want you to fix these problems.”

It’s up to us to fight for those issues, because there’s nothing more important than creating an economy that works for average working people. There’s nothing more important than creating jobs, and there’s nothing more important than putting our people to work. Now’s the time for us to do that. It’s up to us to force both parties to fix the problems for working America.

Congresswoman Moore calls for pre-apprenticeship training program

Losing 11,000 jobs is nothing to cheer about!

Last week the Bureau Labor Statistics reported that the nation lost 11,000 jobs in November.

Most of the coverage was like the of the over the top Milwaukee Journal Sentinel headine which declared: "Optimism returns as unemployment rate dips to 10%."

Not so quick.

As Nobel Prize winning economist Paul Krugman points out:

I don’t think many people grasp just how much job creation we need to climb out of the hole we’re in. You can’t just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs — more than 100,000 a month — to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment.

...we need to add around 18 million jobs over the next five years, or 300,000 jobs a month. This puts last week’s employment report, which showed job losses of “only” 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we’ve been down so long that it looks like up to the financial press.

So if we’re going to have any real good news, someone has to take responsibility for creating a lot of additional jobs. And at this point, that someone almost has to be the Federal Reserve.

I don’t mean to absolve the Obama administration of all responsibility. Clearly, the administration proposed a stimulus package that was too small to begin with and was whittled down further by “centrists” in the Senate. And the measures President Obama proposed earlier this week, while they would create a significant number of additional jobs, fall far short of what the economy needs.

But while economic analysis says that we should have a large second stimulus, the political reality is that the president — faced with total obstruction from Republicans, while receiving only lukewarm support from some in his own party — probably can’t get enough votes in Congress to do more than tinker at the edges of the employment problem.

The Fed, however, can do more.

The entire column is linked.

Nobel Prize winner calls for more federal job creation

Nobel Prize winning economist Paul Krugman writes:

The good news is that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, is working just about the way textbook macroeconomics said it would. But that’s also the bad news — because the same textbook analysis says that the stimulus was far too small given the scale of our economic problems. Unless something changes drastically, we’re looking at many years of high unemployment.

And the really bad news is that “centrists” in Congress aren’t able or willing to draw the obvious conclusion, which is that we need a lot more federal spending on job creation.

The article is attached.

Nobel Prize winner calls for federal job creation

Nobel Prize winning economist Paul Krugman has added his voice to those calling on the Obama administration to increase its job creation efforts, calling anything less "unacceptable."

He writes:

"...while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come... "

The entire column is linked.

Economic recovery requires jobs recovery

In an editorial Saturday The New York Times writes that until the economy begins creating jobs (it lost another 216,000 last month) hopes for a recovery will remain little more than hope:

...the only good thing to say about the August jobs report is that it could have been worse. Employers shed another 216,000 jobs last month, a smaller loss than expected and the lowest monthly loss total in a year.

The losses would have been worse had it not been for federal stimulus spending — proof that the government is indeed helping to ease the downturn in its role as the spender of last resort.

Still, the damage to the work force caused by the recession is deep, wide and ongoing. The economy is now coming up short by 9.4 million jobs, including 6.9 million positions that employers have eliminated and 2.5 million jobs that were needed to absorb new workers but were never created.

And unemployment is on the rise, jumping from 9.4 percent in July to 9.7 percent in August. For several demographic groups, the unemployment rate is already in double digits, including men (10.1 percent), Hispanics (13 percent), African-Americans (15.1 percent) and teenagers (25.5 percent). In all, 14.9 million workers are now jobless, of which fully one-third have been out of work for more than six months, the highest level of long-term unemployment by far in any post World War II recession. There are now nearly six workers available for every job opening, up from 1.7 workers per opening when the recession began in December 2007.

Worse, hiring is not expected to rebound anytime soon, even if overall economic growth resumes this year. Employers are likely to fill any additional workloads by adding hours to truncated workweeks and ending worker furloughs. Wage gains, which are always repressed when jobs are scarce and unemployment is high, will be an even longer time coming as employers restore pay cuts put in place during the recession before giving raises.

Without job growth and pay raises, consumer spending will not revive substantially because alternative sources of spending power — home equity and credit cards — are largely tapped out. And without an upsurge in spending, businesses will not add workers, and so on, in a decidedly unvirtuous cycle.

It has become commonplace to explain each dismal job report by saying that a resurgence in employment always lags general economic recovery. But with the job market severely wounded, and with consumer spending expected to be weak for a very long time, it could easily take until 2014 for employment to recover. It’s safe to say that five years or more of subpar job growth is not what most people have in mind when they think of a “lag.”

The question, then, is how bad does it have to get before the Obama administration and Congress make job creation a priority.

Will administration officials and lawmakers fight for new laws to make it easier to form unions, which are especially important in elevating and protecting the jobs of low-income workers? How will professed support for green jobs be translated into a manufacturing policy that promotes good jobs? Will efforts to improve the educational system also include serious efforts to train and retrain people for new jobs?

Help is wanted for out of work Americans.

Barack Obama calls for bold stimulus program to create jobs and jumpstart the economy

President-elect Barack Obama annouced Saturday that he had begun work on a bold, two-year economic stimulus plan designed to create 2.5 million jobs by investing in public works programs to repair the country’s failing infrastructure, its failing schools and in alternative energy programs.

“We’ll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy," he said. "We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

MJS's wrong on Big 3, auto workers & the UAW!

The Milwaukee Journal Sentinel (MJS) is nothing but consistent when it comes to editorializing on labor relations. While it expresses regret over the loss of family supporting jobs and Milwaukee's nationally high and very stubborn poverty rate, it has never missed an opportunity to push for wage or benefit concessions for unionized workers.

A year and one half ago, when the economy was expanding with corporate profits the highest since the Gilded Age and labors’ take the lowest, the editorial board urged three separate groups of local employees to agree to concessions.

First, County employees were urged to be “realistic”and praised for accepting higher health care premiums and scaled back pension and sick leave benefits.

Then Milwaukee’s Harley Davidson workers were urged to accept lower wages for new employees and changes in their health and pension plans even as Harley generated record revenues and rewarded its executives with huge compensation increases.

Shortly afterwords, the editorial board urged Kenosha’s Chrysler Engine Plant employees, members of UAW Local 72, to "be realistic" and accept “painful concessions” from the company's new owner, the private equity firm, Cerberus, even though Cerberus hadn't even asked for them.

More recently, it has supported eliminating firefighter and Milwaukee County jobs and opposed requiring employers to provide their employees with paid sick days. But its recent editorial that advocates letting the U.S. auto industry with its 3 million middle class jobs go out of business takes the cake. It blithely ignores that the U.S automobile industry is:

• the backbone of America's manufacturing sector


• responsible for 1 out of every 10 private sectors jobs and $150.7 billion in personal income


• critical to America's national defense

The editorial also ignores that failure would cost $156.4 billion in government revenues over just three years at a time when the economy is reeling, unemployment soaring and the deficit approaching one trillion dollars.

Not only does the MJS editorial advocate allowing the Big Three to go bankrupt, but it targets the United Auto Workers Union (UAW) and its middle class members for unjust criticism. It is so loaded with tired, inaccurate and anti-labor rhetoric it could have easily have been cut and pasted from a 1970s' Heritage Foundation report.

Here's what the MJS editorial writers alleged about the UAW and its members and the facts:

A second bailout won't make up for decades of mismanagement and union intransigence...

The U.S automobile industry has been mismanaged. Congress has responded by appropriating $25 billion to assist the industry in developing a new generation of energy efficient vehicles and green technologies. But the industry's current crisis is driven by the credit markets collapse and the resulting recession. One million three hundred thousand (1.3 million) private sector jobs have been lost causing consumer spending to decline for the first time since the early 1970s. As a result, car sales for all auto companies including Toyota have plummeted.

The Big Three are seeking a bridge loan to help it deal with the most severe economic downturn since the Great Depression.

The UAW has been anything but intransigent. The 2003 and 2007 contracts cut billions of dollars in costs for the Detroit 3. In 2007, new hire wage rates were halved to $14 per hour, new hires got reduced health care benefits and were not included in the existing defined benefit health plan. In addition the creation of the VEBA for retiree health care saved the companies $33 billion in future health care obligations.

The UAW has also allowed many sub assembly operations traditionally done in-house to be outsourced to suppliers and has agreed that certain non-core functions like housekeeping could be contracted out to lower paid workers.

The Detroit 3 and the UAW have been operating as if they were in bankruptcy for the last several years. One hundred thousand (100,000) autoworkers have lost their jobs in just the last two years as auto companies have closed plants and reduced capacity.

The overhaul should include severe cost reductions and the end of onerous union rules that hamper productivity.

The UAW long ago recognized that world class quality and high levels of productivity are essential. The UAW at plants like the Chyrsler Engine Plant in Kenosha and the GM Assembly Plant in Janesville have worked in partnership with management to improve quality and productivity. The Chrysler Kenosha Engine plant has been recognized as an industry leader in team based manufacturing techniques modeled on the same operating systems used by Toyota.

But bankruptcy is a system for reorganization - companies continue to operate in Chapter 11. Jobs would be lost, lots of jobs, and a bankruptcy for any of the three companies would be painful. But all 3 million jobs tied to the industry would not vanish. Other companies have emerged from bankruptcy stronger. The airlines repeatedly have foundered only to re-emerge.

The truth is, the Big Three would most likely face a Chapter 7 liquidation not a Chapter 11 reorganization. It is highly unlikely that the Detroit 3 could get debtor in possession financing to continue operating or that consumers would buy cars, the 2nd largest consumer purchase, from bankrupt companies.

It's astounding that the MJS would suggest that the U.S. airline industry is a model. That industry has been a basketcase for almost thirty years. It is currently hemorrhaging billions of dollars and tens of thousands of middle class jobs while reducing routes and capital investment and increasing fares. It is a model for the failure of deregulation.

The truth is, the government has delayed this day of reckoning for years. It bailed out Chrysler in the late 1970s, imposed quotas on Japanese imports in the 1980s, and for decades let the Detroit automakers build gas guzzlers under sham federal fuel-efficiency standards. For its part, the UAW kept fighting for expensive benefits and embracing a 1950s worldview even as the automakers were crashing

The Chrysler bail out was an unmitigated success story. When the federal government offered its help, Chrysler was responsible for one out every one hundred private sector jobs, most located in urban areas. The loans were repaid in full ahead of schedule. A viable Chrysler continued to exist providing family supporting jobs, health care and pensions to tens of thousands of workers and retirees around the nation and in Wisconsin.

Quotas were never imposed on foreign automobile competitors, although Japanese companies adopted voluntary trade restraints in the early 1980s.

Perhaps the MJS editors are confusing the Big Three with Harley Davidson which successfully restructured under the protection of actual quotas.

It is also untruthful and irresponsible to maintain that the UAW embraced a 1950’s mentality as the automakers were crashing. As a result of the 2003 and 2007 contracts the cost gap between the Detroit 3 and Toyota will be eliminated.

Anyone who has been inside a UAW represented Ford, GM or Chrysler plant recently will attest to the strong union commitment to streamlined work rules designed to build high quality vehicles at low cost.

According to the authoritative Harbour Report, the UAW represented Chrysler Belvidere assembly plant was the most productive car assembly plant in the United States in 2007 topping every foreign owned plant. Another UAW plant, a Chrysler joint venture engine plant in Dundee, Michigan was the most productive engine plant in this country last year.

Wisconsin is the home to hundreds of automotive supplier firms such as Johnson Controls, Dana Holding Company, Charter Wire, and Stratech. Tens of thousands are employed at these companies. We have begun to see the impact of GM's shutdown in Janesville which now has the highest unemployment rate in the state. We simply cannot afford to allow this critical industry to go bankrupt. Congress should provide the Big Three with a bridge loan to help it survive the current recession and retool for the next generation of green vehicles and middle class jobs. The MJS should listen to our new President. It needs to reexamine its blind faith in market fundamentalism with its anti-labor animus and support policies that actually promote the middle class and family supporting jobs.

John Drew, UAW Local 72 President (1996-2004), UAW International Representative Region 4

Michael Rosen, Professor of Economics, MATC

How many McMansions does John McCain own?

When John McCain was recently asked how many homes he owned, he said he did not know and would check with his staff.

Millions of Americans are losing their homes. McCain, who owns between 4 and 7 homes depending on whom you believe, has opposed Congressional action designed to help struggling home owners.

McCain's response is not surprising since he denies the economy is in trouble and thinks the country's problems are mainly psychological.

Bush boom leaves middle class out!

Last week, the Milwaukee Journal Sentinel acknowledged for the first time that the current economic expansion was leaving the middle class behind.

Real incomes for working families declined for the second straight year and remain $2000 below what they were in 2000.

The number of Americans without healthcare jumped to 47 million. Many of those who retained their coverage were paying much higher premiums, reducing their disposable incomes.

Mortgage foreclosures are at a record high. It is projected that 2 million households will ultimately default.

Rising gas prices and the soaring cost of college education are also making it harder for middle class families to make ends meet.

And on Friday the US Labor department announced that the nation had lost 4,000 jobs last month and created very few over the last quarter, an average of only 44,000. To put that in perspective, we need 150,000 new jobs a month simply to absorb all the new workers entering the labor market.

Princeton economist, Paul Krugman, writes that supply side apologists argue that their upper end tax cuts created the "Bush boom" including eight million jobs since 2003. But Clinton raised high marginal tax rates and contrary to conservative projections of disaster created twenty-one million jobs.

I have reprinted Krugman's "Where's My Trickle?" below:

September 10, 2007
Op-Ed Columnist
Where’s My Trickle?
By PAUL KRUGMAN

Four years ago the Bush administration, exploiting the political bounce it got from the illusion of success in Iraq, pushed a cut in capital-gains and dividend taxes through Congress. It was an extremely elitist tax cut even by Bush-era standards: the nonpartisan Tax Policy Center says that more than half of the tax breaks went to Americans with incomes of more than $1 million a year.

Needless to say, administration economists produced various misleading statistics designed to convey the opposite impression, that the tax cut mainly went to ordinary, middle-class Americans. But they also insisted that the benefits of the tax cut would trickle down — that lower tax rates on the rich would do great things for the economy, helping everyone.

Well, Friday’s dismal jobs report showed that the Bush boom, such as it was, has run its course. And working Americans have a right to ask, “Where’s my trickle?”

It’s true, as the Bushies never tire of reminding us, that the U.S. economy has added eight million jobs since that 2003 tax cut. That sounds impressive, unless you happen to know that a good part of that gain was simply a recovery from large job losses earlier in the administration’s tenure — and that the United States added no fewer than 21 million jobs after Bill Clinton raised taxes on the rich, a move that had conservative pundits predicting economic disaster.
What’s really remarkable, however, is that four years of economic growth have produced essentially no gains for ordinary American workers.

Wages, adjusted for inflation, have stagnated: the real hourly earnings of nonsupervisory workers, the most widely used measure of how typical workers are faring, were no higher in July 2007 than they were in July 2003.

Meanwhile, benefits have deteriorated: the percentage of Americans receiving health insurance through employers, which plunged along with employment during the early years of the Bush administration, continued to decline even as the economy finally began creating some jobs.
And one of the few seeming bright spots of the Bush-era economy, rising homeownership, is now revealed as the result of a bubble inflated in part by financial flim-flam, which deceived both borrowers and investors.

Now you know why 66 percent of Americans rate economic conditions in this country as only fair or poor, and why Americans disapprove of President Bush’s handling of the economy almost as strongly as they disapprove of the job he is doing in general.

Yet the overall economy has grown at a reasonable pace over the past four years. Where did the economic growth go? The answer is that it went to the same economic elite that received the lion’s share of those tax cuts. Corporate profits rose 72 percent from the second quarter of 2003 to the second quarter of 2007. The real income of the richest 0.1 percent of Americans surged by 51 percent between 2003 and 2005, and although we don’t yet have the data for 2006, everything we know suggests that the income of the rich took another upward leap.

The absence of any gains for workers in the years since the 2003 tax cut is a pretty convincing refutation of trickle-down theory. So is the fact that the economy had a much more convincing boom after Bill Clinton raised taxes on top brackets. It turns out that when you cut taxes on the rich, the rich pay less taxes; when you raise taxes on the rich, they pay more taxes — end of story.

But it’s not just trickle-down that has been refuted: the whole idea that a rising tide raises all boats, that growth in the economy necessarily translates into gains for the great majority of Americans, is belied by the Bush-era experience.

As far as I can tell, America has never before experienced a disconnect between overall economic performance and the fortunes of workers as complete as that of the last four years.
America was a highly unequal society during the Gilded Age, but workers’ living standards nonetheless improved as the economy grew. Inequality rose rapidly during the Reagan years, but “Morning in America” was nonetheless bright enough to make most people cheerful, at least temporarily. Inequality continued to increase during the Clinton years, but wages rose, as did the availability of health insurance — and the great majority of Americans felt prosperous.

What we’ve had since 2003, however, is an economic expansion that looks good if not great by the usual measures, but which has passed most Americans by.

Guaranteed health insurance, which all of the leading Democratic contenders (but none of the Republicans) are promising, would eliminate one of the reasons for this disconnect. But it should be only the start of a broader range of policies — a new New Deal — designed to turn economic growth into something more than a spectator sport.